Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 6

Convergence of Securities Systems, both within countries and across borders, should be encouraged where this eliminates operational risk, reduces cost and enhances market efficiency.

1.	Is the depository linked electronically and in real time with other segments of the core market infrastructure (e.g. trading platforms, netting systems, matching platforms, payment systems)?	A-shares market: The The respective CSDCC branches' automated electronic settlement system is used to contact clearing participants, send clearing and settlement reports, holding reports and entitlement lists, and monitor clearing participants' position. It is also linked to stock exchanges' trading system and the payment systems. B-shares market: The respective CSDCC branches' automated electronic settlement system is used to contact clearing participants, send trading reports, holding reports and entitlement lists, and monitor clearing participants' position. It is also linked to stock exchange's trading system. In Shanghai, after the system being upgraded, SSCCRC's payment system for Shanghai traded B shares has been linked to SSCCRC's settlement system. There is no direct interface between SSCC's settlement system and the payment system.
2.	Is there one or more depository or settlement system in the market?	CSDCC Shanghai and Shenzhen branches have a independent systems respectively in the Shanghai and Shenzhen market. However, consolidation is under study.
3.	If there are several, has a consolidation been considered? If yes, by when?	Since the SSCCRC and SSCC have been merged on March 30, 2001, the system of two central depositories is planned to be integrated, the detailed procedure however is in study.
4.	Does (do) the securities system(s) allow other domestic or foreign systems to establish direct links on an equal basis to local members?	No. Except for CSDCC's settlement system in Shanghai and Shenzhen, no other local or foreign systems are allowed to be established in China market at this stage.
5.	Does (do) the securities system(s) allow foreign market participants to become direct participants?	Yes, foreign market participants could become direct clearing participants of CSDCC Shanghai and Shenzhen provided they are approved by China Securities Regulatory Commission (CSRC) and relevant authorities.